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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File number 1-7159
FLORIDA ROCK INDUSTRIES, INC.
(exact name of registrant as specified in its charter)
Florida 59-0573002
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
155 East 21st Street, Jacksonville, Florida 32206
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 904/355-1781
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock $.10 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
[ X ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant at December 1, 1995 was $181,958,832.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 9,487,109 shares of $.10 par
value common stock outstanding as of December 1, 1995.
Documents Incorporated by Reference
Portions of the Florida Rock Industries, Inc. 1995 Annual Report to
stockholders are incorporated by reference in Parts I, II, III and IV.
Portions of the Florida Rock Industries, Inc. Proxy Statement dated December
18, 1995 are incorporated by reference into Parts I, II and III.
PART I
Item 1. BUSINESS.
Florida Rock Industries, Inc., which was incorporated in Florida in 1945, and
its subsidiaries (the "Company"), are principally engaged in the production and
sale of ready mixed concrete and the mining, processing and sale of sand,
gravel and crushed stone ("construction aggregates"). The Company also
produces and sells concrete block and prestressed concrete and sells other
building materials. Substantially all of the Company's operations are
conducted within the Southeastern United States, primarily in Florida, Georgia,
Virginia, Maryland, Washington, D.C. and North Carolina.
Information as to the Company's business and new developments is presented
under the caption "Operating Review" on pages 4 and 5 of the accompanying 1995
Annual Report to stockholders and such information is incorporated herein by
reference.
Information as to principal classes of products and services and major markets
is presented on page 8 of the accompanying 1995 Annual Report to stockholders,
under the caption "Management Analysis," and such information is incorporated
herein by reference.
Sales are subject to factors affecting the level of general construction
activity including the level of interest rates, availability of funds for
construction, appropriations by federal and state governments for construction,
past overbuilding, labor relations in the construction industry, energy
shortages, material shortages, weather, climate, and other factors affecting
the construction industry in general. A decrease in the level of general
construction activity in any of the Company's market areas caused by any of the
above factors may have a material adverse effect on sales and income derived
therefrom. Labor disputes in the construction industry may result in work
stoppages which may interrupt sales in the affected area. Precipitation or
freezing temperatures may cause a reduction in construction activity and
related demand for the Company's products, particularly ready mixed concrete.
Freezing temperatures generally do not affect the Company's Florida operations.
However, during the winter months, sales and income of the Company's Maryland,
Virginia, North Carolina, Washington, D.C., and Georgia operations are
adversely affected by the impact of inclement weather on the construction
industry.
The Company operates seven crushed stone plants, eight sand plants and one
industrial sand plant in Florida. It operates five crushed stone plants in
Georgia; one sand and gravel plant and three crushed stone plants in Maryland;
and two crushed stone plants and one sand and gravel plant in Virginia. The
Company also operates aggregates distribution terminals in Central Florida;
Northern Virginia; Norfolk/Virginia Beach, Virginia; Baltimore, Maryland and
the Eastern Shore of Maryland. The Company's construction aggregates
operations are spread throughout the Southeast. The Company sells
construction aggregates throughout most of Florida with the principal exception
of the panhandle. In Georgia the Company primarily serves the regional
construction markets around Griffin, Macon, Rome and the southern portion of
the Atlanta market. The Rome quarry also sells crushed limestone to a cement
mill. In Virginia the Company primarily serves the Richmond, Norfolk/Virginia
Beach and Northern Virginia markets. In Maryland the principal markets served
are the greater Baltimore area, Frederick and Montgomery Counties and the
Eastern Shore of Maryland from waterfront distribution yards. In Florida and
Georgia shipments are made by rail and truck. In Virginia and Maryland the
Company primarily serves the regional construction markets around Richmond,
Virginia and the greater Baltimore area by truck; and the Company's marine
division ships materials by barge throughout the Chesapeake Bay area, along the
James River between Richmond and Norfolk/Virginia Beach and as far north as
Woodbridge, Virginia on the Potomac River.
The Company manufactures and markets ready mixed concrete, concrete block and
prestressed concrete. It also markets other building materials. The Company's
concrete operations serve: most of Florida with the principal exception of the
panhandle; Southern Georgia; central Maryland; the Richmond-Petersburg-Hopewell
and Norfolk-Virginia Beach areas of Virginia along with Northeastern Virginia
and Washington, D.C.
Since ready mixed concrete hardens rapidly, delivery is generally confined to
a radius of approximately 20 to 25 miles from the producing plant. The bulk
weight of concrete block limits its delivery to approximately 40 miles from the
producing plant.
The Company's annual single-shift capacity at its 10 operating block plants is
approximately 30 million 8x8x16 equivalent units of block.
At most of the Company's Florida and Georgia concrete facilities, it purchases
and resells building material items related to the use of ready mixed concrete
and concrete block.
Prestressed concrete products for commercial developments and bridge and
highway construction are produced in Wilmington, North Carolina.
During fiscal 1995 the Company purchased cement from 11 suppliers, the largest
of which supplied approximately 26% of the cement used by the Company in its
ready mixed concrete, concrete block, and prestressed concrete operations. At
the present time there is an adequate supply of cement in the areas in which
the Company operates.
In the fiscal year ended September 30, 1995 approximately 42% of the coarse
aggregates and 53% of the sand used in the Company's concrete operations were
produced by the Company. The remaining aggregates were purchased from other
suppliers whose geographic locations coupled with transportation costs make it
more economical to serve several of the Company's plants.
The Company's construction aggregates operations encounter competition in most
of their markets. Price, plant location, transportation costs, service,
product quality and reputation are the major factors which affect competition
within a given market.
The Company's concrete operations encounter competition in all of their markets
ranging from one to nine competitors. Additionally, the Company's concrete
products are competitive with certain other building materials such as asphalt,
brick, lumber, steel and other products. Price, plant location, service,
product quality and reputation are the major factors which affect competition
within a given market.
The Company does not believe that backlog information accurately reflects
anticipated annual revenue or profitability from year to year.
While the Company is affected by environmental regulations, such regulations
are not expected to have a major effect on the Company's capital expenditures
or operating results. Additional information concerning environmental matters
is presented in Item 3 "Legal Proceedings" of this Form 10-K and in Note 12 to
the Consolidated Financial Statements included in the accompanying 1995 Annual
Report to stockholders, and such information is incorporated herein by
reference.
The Company employed approximately 2,218 persons at September 30, 1995.
Item 2. PROPERTIES.
The Company's principal properties are located in Florida, Georgia, North
Carolina, Virginia, Washington, D.C. and Maryland. The following table
summarizes the Company's principal construction aggregates production
facilities and estimated reserves at September 30, 1995.
Tons Tons of
Delivered in Estimated Approximate
Year Ended Reserves Acres
9/30/95 9/30/95 (L-Leased)(a) Lease
(000's) (000's) (O-Owned) Description
The Company has five
limestone quarries in
Florida located at Gulf
Hammock (which also
produces agricultural
limestone), Brooksville,
Ft. Myers (which also 11 leases
produces baserock), L-19,246 expiring
from Naples, and Miami 8,185 108,000 O- 2,027 1996 to 2046
The Company has four
granite and one lime-
stone quarries in
Georgia located at
Griffin, Forest Park, 10 leases
Macon, Tyrone and Rome L-1,452 expiring from
(limestone) 5,965 153,000 O- 93 1996 to 2046
The Company has three
crushed stone plants
located at Havre de
Grace, Frederick, and
Greenspring, Maryland
and two located near L- 41 1 lease
Richmond, Virginia 6,981 172,000 O-1,063 expiring 2018
Tons Tons of
Delivered in Estimated Approximate
Year Ended Reserves Acres
9/30/95 9/30/95 (L-Leased)(a) Lease
(000's) (000's) (O-Owned) Description
The Company has two
base rock plants
located at Ft. Pierce 2 leases
and Sunniland, expiring in
Florida 916 13,000 L-12,985 1996 and 2007
The Company has eight
sand plants located
at Keystone Heights,
Astatula, Lake County,
Marion County, Keuka,
Caloosa, Grandin and
Lake Wales, Florida
and two sand and gravel
plants located at
Leonardtown, Maryland 19 leases
and Turkey, Island L-11,912 expiring
from Virginia. 5,794 150,000 O- 789 1996 to 2046
Future reserves:
Sand-four sites
located in Clay
County, Glades
County, Lake County 2 leases
and Marion County L- 834 expiring from
Florida (c) 61,000 O- 894 2024 to 2036
Limerock: 1 lease
Brooksville, Florida 100,000(b) L- 1,227 expiring in
Newberry, Florida 86,000 O- 258 2046
Granite-four sites located
in Jackson, Muscogee, 6 leases
Paulding (c), and Bartow L- 1,034 expiring from
Counties, Georgia 266,000 O- 1,252 2019 to 2049
Marble-Carroll County,
Maryland 80,000 O- 413
Limestone-Lee County,
Florida (c) 87,000 O- 2,860
(a) Leased acreage includes all properties not owned by the Company as to
which the Company has at least the right to mine construction
aggregates for the terms specified.
(b) Acres are included in the first line of the above table.
(c) All of the required zoning or permits for these locations have not yet
been obtained.
The Company operates six construction aggregates distribution terminals located
in Florida (one), Maryland (three) and Virginia (two) comprising approximately
99 acres, which the Company owns. At September 30, 1995 the Company had a
second terminal consisting of approximately 24 leased acres in Central Florida
under construction.
The Company has 89 sites for its ready mixed concrete, concrete block and
prestressed concrete plants in Florida, Georgia, North Carolina, Virginia and
Maryland aggregating approximately 647 acres. Of these acres, the Company owns
approximately 497 and leases approximately 150. The lease terms vary from
month-to-month to expiring in 2006.
The Company leases, from FRP Properties, Inc., approximately six acres with two
office buildings in Jacksonville, Florida which are used for its executive
offices. Certain of the Company's subsidiaries lease administrative office
space in Springfield, and Virginia Beach, Virginia and Baltimore, Maryland.
Other subsidiaries own administrative offices in Richmond, Virginia; and
Salisbury, Maryland. In addition, the Company owns approximately 158 acres,
some of which are used for shop facilities and some are held for future plant
sites.
The Company owns certain other properties which are summarized as follows:
Approximate
Type Property (1) State Acres
Residential Land Maryland 432
Residential Land New Jersey 33
Industrial/Commercial Virginia 281
Industrial/Commercial Florida 82
Industrial/Commercial Maryland 1,396
Industrial/Commercial North Carolina 27
Agricultural North Carolina 85
(1) The properties owned by the Company are grouped by current or proposed
use. Such use may be subject to obtaining appropriate rezoning, zoning
variances, subdivision approval, permits, licenses, and to compliance with
various zoning, building, environmental and other regulations of various
federal, state, and local authorities.
The Company also owns 1,560 acres in Dade County, Florida. See Part I, Item
3 - Legal Proceedings, of this Form 10-K for additional information on this
property.
At September 30, 1995 certain property, plant and equipment with a carrying
value of $8,601,000 was pledged on industrial development revenue bonds and
certain other notes and contracts with an outstanding principal balance
totaling $12,670,000 on such date.
Reference is made to certain leases with management-related persons disclosed
in the Company's Proxy Statement, to be filed within 120 days of the close of
the fiscal year on September 30, 1995, and in Note 2 to the Company's
Consolidated Financial Statements included in its Annual Report to stockholders
for the year ended September 30, 1995. Such information is incorporated herein
by reference.
Item 3. LEGAL PROCEEDINGS.
A wrongful death action was brought in the Superior Court of New Hanover
County, North Carolina (Case No. 91 CV 0023) against two of the Company's
subsidiaries, S&G Concrete, Inc., and The Arundel Corporation and others,
arising from the death of an employee of an affiliated company in an on-the-job
industrial accident. The complaint seeks compensatory and punitive damages in
unspecified amounts. The case was originally styled Dora Richardson Powell,
individually, and as personal representative of the Estate of Timothy G.
Powell, deceased vs. S&G Concrete Company, et al,; however, the Estate amended
its complaint to show Company subsidiaries, The Arundel Corporation and S&G
Prestress Company, as the new defendants. Company motions for summary judgment
were granted as to each defendant. The Estate has filed Notice of Appeal as
to each of the aforesaid orders for summary judgment. This mater has been
previously reported in the Form 10-Q for the quarters ending December 31, 1990,
March 31, 1993 and Form 10-K for the years ending September 30, 1991, September
30, 1993 and September 30, 1994.
The Company has been advised of soil and groundwater contamination on or near
a site used by the Company as a concrete block manufacturing facility in
Kissimmee, Florida. The contamination by petroleum products apparently
resulted from a leaking underground storage tank on the site. The contaminated
soil and groundwater will have to be remediated in accordance with state and
federal laws. An environmental consulting firm is investigating the site and
has submitted a Contamination Assessment Report ("CAR") to the Florida
Department of Environmental Protection ("DEP") for its review and approval.
By letter dated July 12, 1995, the DEP requested additional site information;
that information has been submitted to DEP. Following DEP approval of the CAR,
a Remedial Action Plan will be developed and submitted to the DEP for approval.
The Company will seek reimbursement of site cleanup costs from the Florida
Petroleum Liability Insurance and Restoration Program and/or the Florida
Abandoned Tank Restoration Program. This matter has been previously reported
on the Form 10-K for the years ending September 30, 1993 and September 30, 1994
and on the Form 10-Q for the quarter ending June 30, 1995.
A personal injury action was brought against the Company and CSX
Transportation, Inc. by Timothy Joe Cupp who was injured while unloading
aggregates from a railroad hopper car leased by the Company. The case is
styled Timothy Joe Cupp vs. Florida Rock Industries, Inc. and CSX
Transportation, Inc., Case No. CV 294-54, in the U.S. District Court for the
Southern District of Georgia. The complaint seeks compensatory damages in an
unspecified amount and punitive damages. On June 14, 1995, a jury awarded Cupp
$10,000 in compensatory damages and found the Company to be 51% negligent. On
August 25, 1995 the Seaboard Construction Company, Cupp's former employer,
filed an appeal. The case has been previously reported on the Form 10-Q for
the quarter ending June 30, 1995 and on the Form 10-K for the year ending
September 30, 1994.
On May 8, 1992, oral arguments were held in the Government's appeal of the U.S.
Claims Court judgment entered in favor of the Company in its inverse
condemnation claim against the U.S. Army Corps of Engineers. The case involves
a 98 acre parcel of a 1560 acre tract with limestone reserves in Dade County,
Florida. On March 10, 1994, the Court of Appeals vacated the U.S. Claims Court
judgment and remanded the case for further proceedings. The Company's petition
for rehearing was denied on June 21, 1994. On September 20, 1994, the Company
filed a petition for writ of certiorari in the U.S. Supreme Court. On January
3, 1995 the U.S. Supreme Court denied the petition for writ of certiorari. On
June 28, 1995 a hearing was held concerning issues to be decided on remand of
the case to the U.S. Court of Federal Claims. A new trial date has not been
set. This case has been previously reported in the Form 10-K for the years
1981 through 1991 and the year 1994 and in the Form 10-Q for the quarters
ending June 1986, December 1986, March 1987, June 1988, June 1989, June 1990,
June 1992 and December 30, 1994. (U.S. Claims Court, Case No. 266-82L and U.S.
Court of Appeals, Case No. 91-5156).
Part II, Item 1 of the Company's Form 10-Q for the quarters ended December 31,
1994, March 31, 1995 and June 30, 1995 and Note 12 to the Consolidated
Financial Statements included in the accompanying 1995 Annual Report to
stockholders are incorporated herein by reference.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No reportable events.
EXECUTIVE OFFICERS OF THE COMPANY
Name Age Office Position Since
Edward L. Baker 60 Chairman of the Board and May 1989
Chief Executive Officer
John D. Baker II 47 President May 1989
H. B. Horner 60 Executive Vice President May 1989
C. J. Shepherdson 79 Vice President September 1972
Donald L. Bloebaum 64 Vice President December 1987
S. Robert Hays 58 Vice President May 1984
Thompson S. Baker II 37 Vice President August 1991
Clarron E. Render, Jr. 53 Vice President August 1991
Fred W. Cohrs 62 Vice President February 1995
Robert C. Peace 63 Vice President February 1973
Ruggles B. Carlson 61 Vice President, Treasurer November 1970
and Assistant Secretary
Dennis D. Frick 53 Secretary October 1992
Wallace A. Patzke, Jr. 48 Controller December 1991
John W. Green 43 Assistant Secretary October 1988
In March 1995 Thompson S. Baker II was elected Executive Vice President of the
Company's Aggregates Group. From August 1991 through March 1995, he served as
President of The Arundel Corporation, a subsidiary of the Company. Prior to
August 1991 he served as President of the Company's Capitol Concrete Division.
Mr. Render served as President of Virginia Concrete Company, Incorporated, a
subsidiary of the Company, from 1988 until August 1991. Prior to 1988 he
served as vice president of Virginia Concrete Company.
Fred W. Cohrs joined the Company in January 1995 and was elected vice president
of the Company in February 1995. In 1994 he was a consultant on various
cement-related projects. From 1991 to 1994 he was a Limited Partner and Chief
Executive Officer of Carolina Cement Company, L.P. (cement manufacturing).
From 1990 to 1991 he was Chairman of the Board and President of Polysius Corp
U.S., an engineering, machinery and process technology company specializing in
cement manufacturing equipment.
Mr. Frick has been with the Company since March 1980 as Associate Corporate
Counsel.
Wallace A. Patzke, Jr. has been with the Company since October 1990 as Director
of Accounting and in December 1991 was promoted to Controller. From 1986 to
1987 he served as Chief Accounting Officer of The Charter Company. From 1988
to 1989 he served as President of Capital Enhancement Corporation, a financial
consulting firm. From 1989 to October 1990 he served as Vice President-
Finance of HES, Inc., an environmental consulting firm.
All other officers have been employed by the Company in their respective
positions for the past five years.
Edward L. Baker and John D. Baker II are brothers and the sons of Thompson S.
Baker who is a member of the Company's Board of Directors. Thompson S. Baker
II is the son of Edward L. Baker.
All executive officers of the Company are elected annually by the Board of
Directors.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There were approximately 1,224 holders of record of Florida Rock Industries,
Inc. common stock, $.10 par value, as of December 1, 1995. The Company's
common stock is traded on the American Stock Exchange (Symbol: FRK).
Information concerning stock prices and dividends paid during the past two
years is included under the caption "Quarterly Results" on page 7 of the
Company's 1995 Annual Report to stockholders and such information is
incorporated herein by reference. Information concerning restrictions on the
payment of cash dividends is included in Note 5 captioned "Lines of credit and
debt" on pages 15 and 16 of the Company's 1995 Annual Report to stockholders
and such information is incorporated herein by reference.
Item 6. SELECTED FINANCIAL DATA.
Information required in response to this Item 6 is included under the caption
"Five Year Summary" on page 6 of the Company's 1995 Annual Report to
stockholders, and such information is incorporated herein by reference.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Information required in response to this Item 7 is included under the captions
"Management Analysis" on pages 8 and 9; "Capital Expenditures" on page 2; in
the second paragraph under the caption "Summary and Outlook" on page 3; and in
Notes 1 through 13 to the Consolidated Financial Statements included in the
accompanying 1995 Annual Report to stockholders and in Item 3 "Legal
Proceedings" of this Form 10-K. Such information is incorporated herein by
reference.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information required in response to this Item 8 is included under the caption
"Quarterly Results" on page 7 and on pages 10 through 20 of the Company's 1995
Annual Report to stockholders. Such information is incorporated herein by
reference.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Information required in response to this Item 9 is included under the caption
"Independent Auditors" in the Company's Proxy Statement dated December 18,
1995; and such information is incorporated herein by reference.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information concerning directors required in response to this Item 10 is
included under the captions "Election of Directors" and "Compliance With
Section 16(a) of the Securities Exchange Act of 1934" in the Company's Proxy
Statement dated December 18, 1995, and such information is incorporated herein
by reference.
Information concerning executive officers required in response to this Item 10
is included following Item 4 of this Form 10-K.
Item 11. EXECUTIVE COMPENSATION.
Information required in response to this Item 11 is included under the captions
"Executive Compensation," "Compensation Committee Report," "Compensation
Committee Interlocks and Insider Participation," and "Shareholder Return
Performance" in the Company's Proxy Statement dated December 18, 1995, and such
information is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required in response to this Item 12 is included under the captions
"Common Stock Ownership of Certain Beneficial Owners" and "Common Stock
Ownership by Directors and Officers" in the Company's Proxy Statement dated
December 18, 1995, and such information is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required in response to this Item 13 is included under the captions
"Compensation Committee Interlocks and Insider Participation" and "Certain
Relationships and Related Transactions" in the Company's Proxy Statement dated
December 18, 1995 and in Note 2 to the Consolidated Financial Statements
included in the accompanying 1995 Annual Report to stockholders, and such
information is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a)(1) and (2)Financial Statements and Financial Statement Schedules.
The response to this item is submitted as a separate section. See Index
to Financial Statements and Financial Statement Schedules on page 15 of
this Form 10-K.
(3)Exhibits
The response to this item is submitted as a separate section. See Exhibit
Index on pages 12 through 14 of this Form 10-K.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the three months ended
September 30, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
FLORIDA ROCK INDUSTRIES, INC.
Date: December 6, 1995 By RUGGLES B. CARLSON
Ruggles B. Carlson
Vice President & Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on December 6, 1995.
EDWARD L. BAKER CHARLES H. DENNY III
Edward L. Baker Charles H. Denny III
Director, Chairman of the Board Director
and Chief Executive Officer
(Principal Executive Officer)
ALBERT ERNEST JR.
Albert D. Ernest, Jr.
RUGGLES B. CARLSON Director
Ruggles B. Carlson
Vice President & Treasurer
(Principal Financial and LUKE E. FICHTHORN III
Accounting Officer) Luke E. Fichthorn III
Director
Thompson S. Baker FRANK M. HUBBARD
Director Frank M. Hubbard
Director
JOHN D. BAKER II
John D. Baker II FRANCIS X. KNOTT
Director Francis X. Knott
Director
T. S. BAKER II
Thompson S. Baker II RADFORD D. LOVETT
Director Radford D. Lovett
Director
ALVIN R. CARPENTER
Alvin R. Carpenter W. THOMAS RICE
Director W. Thomas Rice
Director
ROBERT D. DAVIS
Robert D. Davis C. J. SHEPHERDSON
Director C. J. Shepherdson
Director
FLORIDA ROCK INDUSTRIES, INC.
FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
EXHIBIT INDEX
[Item 14(a)(3)]
Page No. in
Sequential
Numbering
(2)(a) Agreement and Plan of Reorganization entered into
as of March 5, 1986 between the Company and
Florida Rock & Tank Lines, Inc. ("FRTL") pursuant
to the distribution pro rata to the Company's
stockholders of 100% of the outstanding stock of
FRTL has previously been filed as Appendix I to
the Company's Proxy Statement dated June 11,
1986. File No. 1-7159.
(3)(a)(1) Restated Articles of Incorporation of Florida
Rock Industries, Inc., filed with the Secretary
of State of Florida on May 9, 1986. Previously
filed with Form 10-Q for the quarter ended
December 31, 1986. File No. 1-7159.
(3)(a)(2) Amendment to the Articles of Incorporation of
Florida Rock Industries, Inc. filed with the
Secretary of State of Florida on February 19,
1992. Previously filed with Form 10-K for the
fiscal year ended September 30, 1993. File No.
1-7159.
(3)(a)(3) Amendments to the Articles of Incorporation of
Florida Rock Industries, Inc. filed with the
Secretary of State of Florida on February 7,
1995. Previously filed as appendix to the
Company's Proxy Statement dated December 15,
1994.
(3)(b)(1) Restated Bylaws of Florida Rock Industries, Inc.,
adopted December 1, 1993. Previously filed with
Form 10-K for the fiscal year ended September 30,
1993. File No. 1-7159.
(3)(b)(2) Amendment to the Bylaws of Florida Rock
Industries, Inc. adopted October 5, 1994.
Previously filed with Form 10-K for the fiscal
year ended September 30, 1994. File No. 1-7159.
(4)(a) Articles III, VII, and XIII of the Articles of
Incorporation of Florida Rock Industries, Inc.
Previously filed with Form 10-Q for the quarter
ended December 31, 1986 and Form 10-K for the
fiscal year ended September 30, 1993. And
Articles XIV and XV previously filed as appendix
to the Company's Proxy Statement dated December
15, 1994. File No. 1-7159.
(4)(b)(1) Amended and Restated Revolving Credit and Term
Loan Agreement dated as of December 5, 1990,
among Florida Rock Industries, Inc.; Continental
Bank, N. A.;Barnett Bank of Jacksonville, N. A.;
Sun Bank, National Association; Crestar Bank;
First Union National Bank of Florida; The First
National Bank of Maryland; Southeast Bank, N. A.;
and Maryland National Bank. Previously filed
with Form 10-K for the fiscal year ended
September 30, 1990. File No. 1-7159.
(4)(b)(2) First Amendment dated as of September 30, 1992 to
the Amended and Restated Revolving Credit and
Term Loan Agreement dated as
of December 5, 1990. Previously filed with Form
10-K for the fiscal year ended September 30,
1992. No. 1-7159.
Page No. in
Sequential
Numbering
(4)(b)(3) Second Amendment dated as of June 30, 1994 to the
Amended and Restated Revolving Credit and Term
Loan Agreement dated as of December 5, 1990.
Previously filed with Form 10-Q for the quarter
ended June 30, 1994. File No. 1-7159.
(4)(c) The Company and its consolidated subsidiaries
have other long-term debt agreements which do not
exceed 10% of the total consolidated assets of
the Company and its subsidiaries, and the Company
agrees to furnish copies of such agreements and
constituent documents to the Commission upon
request.
(10)(a) Retirement Benefits Agreement between Florida
Rock Products Corporation and Thompson S. Baker
dated September 30, 1964. Previously filed with
Form S-1 dated June 29, 1972. File No. 2-44839.
(10)(b) Retirement Benefits Agreement between Shands &
Baker, Inc., and Thompson S. Baker dated
September 30, 1964 and amendment thereto dated
September 22, 1970. Previously filed with Form
S-1 dated June 29, 1972. File No. 2-44839.
(10)(c) Employment Agreement dated June 12, 1972 between
Florida Rock Industries, Inc. and Charles J.
Shepherdson, Sr. and form of Addendum thereto.
Previously filed with Form S-1 dated June 29,
1972. File No. 2-44839
(10)(d) Addendums dated April 3, 1974 and November 18,
1975 to Employment Agreement dated June 12, 1972
between Florida Rock Industries, Inc., and
Charles J. Shepherdson, Sr. Previously filed
with Form 10-K for the fiscal year ended
September 30, 1975. File No. 1-7159.
(10)(e) Florida Rock Industries, Inc. 1981 Stock Option
Plan. Previously filed with Form S-8 dated March
3, 1982. File No. 2-76407.
(10)(f) Amended Medical Reimbursement Plan of Florida
Rock Industries, Inc., effective May 24, 1976.
Previously filed with Form 10-K for the fiscal
year ended September 30, 1980. File No. 1-7159.
(10)(g) Amendment No. 1 to Amended Medical Reimbursement
Plan of Florida Rock Industries, Inc. effective
July 16, 1976. Previously filed with Form 10-K
for the fiscal year ended September 30, 1980.
File No. 1-7159
(10)(h) Tax Service Reimbursement Plan of Florida Rock
Industries, Inc. effective October 1, 1976.
Previously filed with Form 10-K for the fiscal
year ended September 30, 1980. File No. 1-7159.
(10)(I) Amendment No. 1 to Tax Service Reimbursement Plan
of Florida
Rock Industries, Inc. Previously filed
with Form 10-K for the fiscal year ended
September 30, 1981. File No. 1-7159.
(10)(j) Amendment No. 2 to Tax Service Reimbursement Plan
of Florida
Page No. in
Sequential
Numbering
Rock Industries, Inc. Previously filed with Form
10-K for the fiscal year ended September 30,
1985. File No. 1-7159.
(10)(k) Summary of Management Incentive Compensation Plan
as amended effective October 1, 1992. Previously
filed with Form 10-K for the fiscal year ended
September 30, 1993. File No. 1-7159.
(10)(l) Florida Rock Industries, Inc. Management Security
Plan. Previously filed with Form 10-K for the
fiscal year ended September 30, 1985. File No.
1-7159.
(10)(m) Various mining royalty agreements with FRTL or
its subsidiary, none of which are presently
believed to be material individually, but all of
which may be material in the aggregate.
Previously filed with Form 10-K for the fiscal
year ended September 30, 1986. File No. 1-7159.
(10)(n) Florida Rock Industries, Inc. 1991 Stock Option
Plan. Previously filed with Form 10-K for the
fiscal year ended September 30, 1992. And
February 1, 1995 Amendment to Florida Rock
Industries, Inc. 1991 Stock Option Plan.
Previously filed as appendix to the Company's
Proxy Statement dated December 15, 1994. File
No. 1-7159.
(10)(o) Split Dollar Insurance Agreement dated January
24, 1994 between Edward L. Baker and Florida Rock
Industries, Inc. Previously filed with Form 10-K
for the fiscal year ended September 30, 1994.
File No. 1-7159.
(10)(p) Split Dollar Insurance Agreement dated January
24, 1994 between John D. Baker II and Florida
Rock Industries, Inc. Previously filed with Form
10-K for the fiscal year ended September 30,
1994. File No. 1-7159.
(11) Computation of Earnings Per Common Share.
(13) The Company's 1995 Annual Report to stockholders,
portions of which are incorporated by reference
in this Form 10-K. Those portions of the 1995
Annual Report to stockholders which are not
incorporated by reference shall not be deemed to
be filed as part of this Form 10-K.
(16) Letter regarding change in certifying
accountant was previously filed with
Forms 8-K dated May 4, 1994
(22)(a) Subsidiaries of the Company. Previously filed
with Form 10-K for the fiscal year ended
September 30, 1993. File No. 1-7159.
(23)(a) Consent of Deloitte & Touche LLP, Independent
Certified Public Accountants, appears on page 17
of this Form 10-K.
(23)(b) Consent of Ernst & Young LLP, Independent
Certified Public Accountants, appears on page 18
of this Form 10-K.
(27) Financial Data Schedule
FLORIDA ROCK INDUSTRIES, INC.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
(Item 14(a)(1)and (2))
Page
Consolidated Financial Statements:
Consolidated balance sheet at September 30, 1995 and 1994 11(a)
For the years ended September 30, 1995, 1994 and 1993:
Consolidated statement of income 10(a)
Consolidated statement of stockholders' equity 13(a)
Consolidated statement of cash flows 12(a)
Notes to consolidated financial statements 14-19(a)
Selected quarterly financial data (unaudited) 7(a)
Independent Auditors' Report (Deloitte & Touche LLP) 20(a)
Report of Independent Certified Public Accountants
(Ernst & Young LLP) 16(b)
Consent of Independent Certified Public Accountants
(Deloitte & Touche LLP) 17(b)
Consent of Independent Certified Public Accountants
(Ernst & Young LLP) 18(b)
Consolidated Financial Statement Schedules:
Independent Auditors' Report 19(b)
II - Valuation and qualifying accounts 20(b)
(a) Refers to the page number in the Company's 1995 Annual Report
to stockholders. Such information is incorporated by reference
in Item 8 of this Form 10-K.
(b) Refers to the page number in this Form 10-K.
All other schedules have been omitted as they are not required
under the related instructions, are inapplicable, or because the
information required is included in the consolidated financial
statements.
Report of Independent Certified Public Accountants
Board of Directors and Stockholders
Florida Rock Industries, Inc.
We have audited the Florida Rock Industries, Inc. 1993 consolidated
statements of income, stockholders' equity and cash flows included in the
1995 Annual Report to Shareholders of Florida Rock Industries, Inc. which
are incorporated by reference in this Annual Report on Form 10-K. Our
audit also included the 1993 financial statement schedule of Florida Rock
Industries, Inc. listed in Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated results of
operations and cash flows of Florida Rock Industries, Inc. for the year
ended September 30, 1993, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Jacksonville, Florida
November 30, 1993
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Post Effective
Amendments No. 1 to the Registration Statements (Form S-8 Numbers
2-68961 and 2-76407) pertaining to the Florida Rock Industries,
Inc. ("FRI") 1980 Employee Stock Purchase Plan and 1981 Stock
Option Plan and the Registration Statements (Forms S-8 Numbers
33-56322, 33-56428, and 33-56430) pertaining to the Florida Rock
Industries, Inc. 1991 Stock Option Plan, Amended and Restated
Profit Sharing Plan and Trust including the Deferred Earnings Plan
and Tax Reduction Act Employee Stock Ownership Plan and in the
related Prospectuses of our reports dated December 1, 1995,
appearing in and incorporated by reference in this Annual Report on
Form 10-K of FRI for the year ended September 30, 1995.
DELOITTE & TOUCHE LLP
Jacksonville, Florida
December 19, 1995
Consent of Ernst & Young LLP
Independent Certified Public Accountants
We consent to the use of our report dated November 30, 1993 in this
Annual Report (Form 10-K) of Florida Rock Industries, Inc.
We further consent to the incorporation by reference in the Post
Effective Amendments No. 1 to the Registration Statements (Form S-8
Numbers 2-68961 and 2-76407) pertaining to the Florida Rock
Industries, Inc. 1980 Employee Stock Purchase Plan and the 1981
Stock Option Plan and the Registration Statements (Form S-8 Numbers
33-56322, 33-56428, and 33-56430) pertaining to the Florida Rock
Industries, Inc. 1991 Stock Option Plan, Amended and Restated
Profit Sharing Plan and Trust including the Deferred Earnings Plan
and Tax Reduction Act Employee Stock Ownership Plan and in the
related Prospectus of our report dated November 30, 1993, with
respect to the consolidated financial statements and schedule of
Florida Rock Industries, Inc. included or incorporated by reference
in this Annual Report (Form 10-K).
ERNST & YOUNG LLP
Jacksonville, Florida
December 19, 1995
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Florida Rock Industries, Inc.
Jacksonville, Florida
We have audited the consolidated financial statements of Florida
Rock Industries, Inc. and its subsidiary companies ("FRI") as of
September 30, 1995 and 1994 and and for the years then ended, and
have issued our report thereon dated December 1, 1995; such
consolidated financial statements and report are included in your
1995 Annual Report to Stockholders and are incorporated herein by
reference. Our audits also included the financial statement
schedules of FRI as of September 30, 1995 and 1994 and for the
years then ended, listed in Item 14. These financial statement
schedules are the responsibility of FRI's management. Our
responsibility is to express an opinion based on our audits. In
our opinion, such financial statement schedules as of September 30,
1995 and 1994 and for the years then ended, when considered in
relation to the basic financial statements as of September 30, 1995
and 1994 and for the years then ended taken as a whole, present
fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Jacksonville, Florida
December 1, 1995
FLORIDA ROCK INDUSTRIES, INC.
SCHEDULE II (CONSOLIDATED) - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED SEPTEMBER 30, 1995, 1994, AND 1993
Additions
Balance at Charged to Charged Balance
Beginning Costs and to Other at end
Description of Year Expenses Accounts Deductions of Year
Year ended
September 30,
1995:
Allowance for
doubtful
accounts $1,627,273 $ 222,737 $ 124,182a $1,725,828
Accrued risk
insurance
reserves $5,514,485 $3,168,566 $3,305,910b $5,377,141
Accrued
reclamation
costs $3,151,611 $ 939,680 $ 108,667b $3,982,624
Year ended
September 30,
1994:
Allowance for
doubtful
accounts $1,427,909 $ 464,917 $ 265,553a $1,627,273
Accrued risk
insurance
reserves $6,191,529 $2,584,671 $3,261,715b $5,514,485
Accrued
reclamation
costs $2,730,962 $ 613,238 $ 192,589b $3,151,611
Year ended
September 30,
1993:
Allowance for
doubtful
accounts $1,272,894 $ 505,193 $ 350,178a $1,427,909
Accrued risk
insurance
reserves $6,102,156 $3,187,888 $3,098,515b $6,191,529
Accrued
reclamation
costs $2,627,673 $ 362,216 $ 258,927b $2,730,962
a Accounts written off less recoveries
b Payments
Annual Report 1995
Florida Rock Industries, Inc.
CONSOLIDATED FINANCIAL HIGHLIGHTS
Years ended September 30
(Dollars in thousands except per share amounts)
%
1995 1994 Change
____ ____ ______
Net sales $368,959 $336,526 + 9.6
Gross profit $ 73,752 $ 59,431 + 24.1
Operating profit $ 39,231 $ 27,461 + 42.9
Income before income taxes $ 36,372 $ 25,533 + 42.5
Net income $ 23,912 $ 17,216 + 38.9
Per common share:
Net income $ 2.51 $ 1.82 + 37.9
Stockholders' equity $ 22.27 $ 20.25 + 10.0
Cash dividend $ .50 $ .50
Return on ending stockholders' equity 11.3% 9.0%
1995 CORPORATE HIGHLIGHTS
*Sales increased - 10%
*Net income increased - 39%
*Continuing efficiency improvements
*$40,374,000 invested in additional property, plant and equipment
*$75,000,000 revolving credit agreement of which all was unused at year
end
*Short-term lines of credit aggregating $30,000,000 of which $20,600,000
was unused at year end
BUSINESS. The Company is a major Southeastern construction materials company
concentrating in construction aggregates and concrete products in Florida,
Georgia, Virginia, Maryland, and Washington, D.C.
OBJECTIVE. The Company's objective is to grow as a major Southeastern natural
resource oriented, basic construction materials company which provides sound
long-term growth and a superior return on stockholders' equity.
*Internal growth is accomplished through emphasizing superior products and
service to customers in expanding markets, and engaging in an ongoing
exploration program for new aggregates deposits to serve new and existing
markets.
*External growth through the acquisition program is designed to broaden the
Company's geographic market area by acquiring related businesses in the
Southeast.
To Our Stockholders
Florida Rock Industries, Inc.
1995 was both a good year and a time of continuing improvement for
Florida Rock. Net income increased 39% on only a 10% sales increase. The
improved results are due to a combination of higher prices, increased demand
and our management team's cost reduction, efficiency improvement and capital
investment programs over the past five years.
Results. Sales for fiscal 1995 were $368,959,000, up 10% from
$336,526,000 in fiscal 1994. The increase in sales was due to increased
volume, increased prices, growing infrastructure programs and continuing good
demand in the commercial and multifamily markets. The mild winter resulted in
an unusually strong first six months which contributed to the improved sales
and operating results for the year.
In 1995 operating profit increased 43% to $39,231,000 from
$27,461,000. Profit margins improved as the result of increased sales,
improved efficiencies from continuing cost containment programs, price
increases and the volume leverage inherent in our business. Selling, general
and administrative expense increased 8% primarily as the result of both
increased expenses due to higher sales and increased profit sharing
contribution due to improved profits. Underlying expense levels increased, but
declined as a percentage of sales.
The decline in interest expense was due to the reduction in average
debt outstanding and was substantially offset by an increase in short-term
rates.
In the fourth quarter of fiscal 1995 the Company recorded a before tax
loss on the write down of the carrying value of certain real estate totaling
$2,018,000.
Income before income taxes increased 42% to $36,372,000 from
$25,533,000 in 1994. Net income was $23,912,000 which was a 39% increase from
fiscal 1994's net income of $17,216,000. Earnings per share in 1995 were
$2.51, a 38% increase over $1.82 last year.
Planned New Cement Plant. Florida Rock Industries plans to construct a
750,000 ton per year capacity Portland Cement production facility on 1,500
acres owned and leased near the town of Newberry in Alachua County, Florida.
Once final zoning and permitting has been completed, it is estimated that
construction will take approximately two years. The project is further
discussed under the Operating Review section of this Annual Report. Capital
Expenditures. Management continues to believe the key to long-term growth and
profitability is through its continuing major capital expenditure program
leading to low cost operations and new operations where warranted by expected
market development.
Fiscal 1995 capital expenditures totaled $40,374,000. The capital
expenditures were divided approximately 71% for replacements, including
modernization, safety and environmental, and 29% for expansions and to acquire
land and aggregates deposits to be used in current and future operations.
Depreciation, depletion and amortization was $26,518,000. The fiscal
1996 capital expenditure plan totals approximately $95,000,000 versus
estimated depreciation and depletion of $29,000,000. Approximately 33% of the
planned expenditures is for plant and equipment replacements and
modernization, 61% is for expansion and new projects, and 6% is for new plant
sites and deposits. The expansion and new project portion of the capital
expenditure plan includes $33,000,000 for the first phase of the new cement
plant. The expenditures for the new cement plant are contingent upon final
zoning and permitting approvals. The 1996 capital expenditure plan is subject
to review as market conditions and the economic picture evolve.
Financial Management. Cash flow from operations of $54,698,000 enabled the
Company to fund its major capital expenditure program for fiscal 1995 and
reduce debt.
During 1995 total debt was reduced $9,253,000 from $32,477,000 to
$23,224,000 at September 30, 1995.
At September 30, 1995 nothing was borrowed under the $75,000,000
revolving credit agreement. The Company has $30,000,000 in short-term bank
lines of which $9,400,000 was utilized at year end.
The Company anticipates that prior to making binding commitments for
the new cement plant, it will have entered into a new revolving credit
agreement which will expand the availability to $175,000,000 and extend the
final maturity to 2002.
Dividends. The Board of Directors maintained the semiannual dividend
of $.25 per share. Consequently, cash dividends of $.50 per share were paid to
stockholders during the year.
Subsequent to fiscal year end, in December 1995, the Board declared
the semiannual cash dividend of $.25 per share payable on January 2, 1996 to
stockholders of record on December 18, 1995.
Stock Repurchase. The Board of Directors authorized management to
repurchase shares of the Company's common stock from time to time as
opportunities may arise.
Stockholders Meeting. On February 1, 1995 the annual stockholders
meeting was held in Jacksonville, Florida. The stockholders elected A. R.
Carpenter, John D. Baker II and Charles H. Denny III as directors to terms
expiring in 1999.
Board of Directors. At the February Board meeting Robert D. Davis was
elected to the Board of Directors. Mr. Davis served as Chairman of the Board
of Directors of Winn-Dixie Stores, Inc. and retired in 1990. Currently, Mr.
Davis is the Chairman of the Board of Directors of DDI, Inc. and serves on the
Board of Directors of Alliance Mortgage Company, American Heritage Life
Investment Corporation, First Union Corporation, Stein Mart, Inc. and
Winn-Dixie Stores, Inc.
It is with deep regret we report the death of Henry J. Knott on
November 26, 1995. Mr. Knott served as a director of the Company for eight
years and rendered loyal and dedicated service to the Company and its
shareholders. Mr. Knott will be missed as a valued friend and business
associate.
Safety and Environment. Management continued its emphasis on a safe,
drug-free work place.
During 1995 all the Company's operations continued to make both
capital and operating expenditures in accordance with the Company's goal to
not only be in compliance with the environmental regulations but to be a model
member of each community in which it has a presence. The Company's stone
quarries received a number of awards for various achievements. Among them were
two of particular note. The Naples Quarry received the National Stone
Association's "Gold Eagle" award for environmental accomplishments, and the
Gulf Hammock Quarry was selected as NSA's "Small Quarry of the Year." Three of
the Company's quarries; Brooksville, Gulf Hammock and Naples, have earned
certification by the Wildlife Habitat Council, a national organization
dedicated to environmental enhancement, as wildlife habitats. Numerous safety
awards were received from several organizations including the National Stone
Association, the National Safety Council, the State of Florida, and the Holmes
Safety Association. Most notable among them was the award made by the National
Safety Council to the Macon Quarry for "Best Ever Safety Record" for a granite
quarry. Four of the Company's stone quarries have each passed a noteworthy
milestone in amassing more than 1,000,000 man-hours of work without
experiencing a lost time accident. They are the quarries at Miami, Fort Myers,
Gulf Hammock and Macon.
Business Process Improvement. The Company has undertaken an initiative
in total quality management. It is called "Business Process Improvement."
Features of the program are:
* Customer Satisfaction
* Employee Involvement and Teamwork
* Process Improvement
Since starting the initiative in 1994, approximately 650 employees
have been trained in the principles of quality, and 36 process improvement
teams were formed to address specific issues in customer service and cost
reduction. Training continues at an accelerating rate.
Summary and Outlook. Sales in 1995 were superior to expectations.
Increased volumes, due partly to the mild winter, and prices, combined with
improved efficiencies and continuing cost control, resulted in improved
earnings. The capital expenditure program again focused on higher than normal
replacements and additional trucks and equipment to meet increased demand and
to improve efficiencies.
In 1996 management expects continued slow economic growth. The Federal
Reserve's dedication to contain inflation is expected to result in fairly
constant interest rates with a hoped for downward bias. Mortgage rates have
peaked and started down with the result that single family home building
permits began to recover around June of 1995. While off from its high,
residential construction remains at reasonable levels. Non-residential
construction has recovered and is now moving with local supply and demand. In
Georgia, non-residential construction was very strong in 1995, primarily due
to preparation for the 1996 Olympic Games being held in Atlanta. This segment
is expected to decline in 1996 as all of the Olympic projects are completed.
Commercial industrial construction markets recovered during 1994 and remain
driven by capacity utilization. Federal and state infrastructure requirements
remain good and are expected to continue to grow in all markets, although they
will remain constrained by each respective state's ability to fund its
programs.
Fiscal 1996 is expected to be a year of modestly improved sales and
earnings.
Management continues to explore new opportunities to further expand
and develop the Company in its existing and contiguous geographical markets.
The Southeastern markets served by Florida Rock are among the prime long-term
growth markets in the United States. Management's long-term operating plans
remain based on the forecasted secular growth in the Company's markets and a
belief in the fundamental strength of the U.S. economy.
The continuing dedication and excellent performance of our managers
and employees have been critical in improving profitability and will be the
key to Florida Rock's growth and success in the future.
Respectfully yours,
Edward L. Baker
Chairman of the Board and Chief Executive Officer
John D. Baker II
President
Operating Review
Florida Rock Industries, Inc.
Operations. Sales increased in fiscal 1995 with growth in Florida, Georgia,
Virginia and Maryland. Increased sales, combined with ongoing efficiency
improvement programs, resulted in improved profit and profit margins. The
gross profit margin increased to 20.0% in fiscal 1995 from 17.7% in fiscal
1994.
The Company produces and sells construction aggregates, ready mixed concrete,
concrete block and prestressed concrete. It also markets other building
materials.
The Company operates seven crushed stone plants, eight sand plants and one
industrial sand plant in Florida.
It operates five crushed stone plants in Georgia; one sand and gravel plant and
three crushed stone plants in Maryland; and two crushed stone plants and one
sand and gravel plant in Virginia. The Company also operates aggregates
distribution terminals in Northern Virginia; Norfolk/Virginia Beach, Virginia;
Baltimore, Maryland and the Eastern Shore of Maryland. In Florida the Company
is developing aggregate distribution terminals which will be served by unit
trains. One terminal is now operating in the Orlando area.
The Company's construction aggregates operations are spread throughout the
Southeast. The Company sells construction aggregates throughout most of Florida
with the principal exception of the panhandle. In Georgia the Company primarily
serves the regional construction markets around Griffin, Macon, Rome and the
southern portion of the Atlanta market. The Rome quarry also sells crushed
limestone to a cement mill. In Virginia the Company primarily serves the
Richmond, Norfolk/Virginia Beach and Northern Virginia markets. In Maryland the
principal markets served are the greater Baltimore area, Frederick and
Montgomery Counties and the Eastern Shore of Maryland from waterfront
distribution yards.
The Company has substantial long-term reserves of sand and stone in Florida,
Georgia, Maryland and Virginia which are owned or under long-term mining leases
with terms generally commensurate with the extent of the deposits at current
rates of extraction.
Ready mixed concrete is produced and sold throughout peninsular Florida; South
Georgia; Richmond, Norfolk/Virginia Beach, and Northeastern Virginia; Central
Maryland; and Washington, D.C.
Prestressed concrete products for commercial developments and bridge and
highway construction are produced in Wilmington, North Carolina.
At the end of fiscal 1995 the Company had 82 ready mixed concrete plants and
10 concrete block plants, and a delivery fleet of 875 ready mix and block
trucks. During 1995 $9,770,000 was invested in 100 new ready mix and block
trucks to both modernize and expand the fleet. All the Florida and Georgia
ready mixed concrete plants are fully operational. Two ready mixed concrete
plants in Virginia are being operated only on an as needed basis, with
day-to-day demand being met from other nearby Company plants.
New Developments. Management continued to modernize and expand operations
where cost savings and/or long-term growth plans warranted.
As in 1994, the vast majority of capital expenditures during 1995 were for
equipment replacements and expansions. Three new ready mixed concrete plants
were put into operation to serve the Baltimore, Maryland, Nassau County,
Florida and Richmond, Virginia markets. A new base rock crushing system was
completed at the Miami quarry. Modernization of the Macon, Georgia quarry
continued. A new construction aggregates distribution yard in Central Florida
was completed and put into operation in the fourth quarter. A new sand plant
was permitted on a new deposit which will be built in 1996 to better serve
segments of the Central Florida market.
Fiscal 1996 should continue to reflect the benefits of the operating
efficiencies from capital improvements which, when combined with increased
sales, should again result in increased earnings.
Cement Plant Project. The Company plans to construct a 750,000 tons per year
capacity Portland Cement production facility.
The Company is currently engaged in the arduous process of obtaining all the
necessary building, operating and zoning permits. It is expected that all
necessary permits will be received in 1996. Once permitting is complete,
construction and equipment contracts will be let. Construction time, measured
from the date the principal equipment is ordered, is expected to be
approximately 24 months.
The proposed cement plant will employ state-of-the-art technology for optimum
energy consumption, man-power requirements and pollution control technology.
At capacity it is expected to be the low cost producer in its market area. The
raw materials will be supplied by property presently owned and leased and
zoned for mining by Florida Rock Industries, and by nearby electric power
plants.
The cement will be shipped in bulk trucks and rail cars to ready mixed concrete
plants, contractors and a variety of consumers engaged in construction
activities. It will also produce a small amount of masonry cement which will be
shipped in bags to distributors, such as building supply houses.
Consistent with the Company's high environmental standards, all materials which
enter the process will be converted into a saleable product, avoiding any need
to deal with solid or liquid waste.
Five Year Summary
Florida Rock Industries, Inc.
YEARS ENDED SEPTEMBER 30
(Dollars and shares in thousands except per share amounts)
1995 1994 1993 1992 1991
____ ____ ____ ____ ____
Summary of Operations
Net sales $368,959 $336,526 $294,431 $271,821 $295,726
Gross profit $ 73,752 $ 59,431 $ 41,704 $ 34,956 $ 36,013
Operating profit $ 39,231 $ 27,461 $ 11,403 $ 6,480 $ 4,415
Interest expense $ 2,060 $ 2,223 $ 2,850 $ 3,146 $ 4,800
Income before
income taxes $ 36,372 $ 25,533 $ 12,185 $ 4,325 $ 1,682
Provision (benefit)
for income taxes $ 12,460 $ 8,317 $ 4,408 $ 469 ($ 361)
Net income $ 23,912 $ 17,216 $ 7,777 $ 3,856 $ 2,043
Per Common Share
Net income $ 2.51 $ 1.82 $ .85 $ .42 $ .22
Stockholders' equity $22.27 $20.25 $18.66 $18.32 $18.40
Cash dividend $ .50 $ .50 $ .50 $ .50 $ .50
Financial Summary
Current assets $ 78,788 $ 75,720 $ 73,017 $ 65,907 $ 62,590
Current liabilities $ 57,614 $ 49,298 $ 52,033 $ 46,645 $ 47,724
Working capital $ 21,174 $ 26,422 $ 20,984 $ 19,262 $ 14,866
Property, plant
and equipment, net $220,325 $208,076 $210,110 $204,235 $204,822
Total assets $326,029 $310,590 $312,384 $296,784 $299,724
Long-term debt $ 9,653 $ 23,116 $ 43,877 $ 39,379 $ 41,394
Stockholders' equity $211,255 $192,090 $171,594 $168,480 $169,527
Other Data
Return on ending
stockholders' equity 11.3% 9.0% 4.5% 2.3% 1.2%
Return on capital employed 8.9% 6.9% 3.4% 2.2% 1.9%
Additions to property,
plant and equipment $ 40,374 $ 23,121 $ 33,558 $ 26,789 $ 26,210
Depreciation, depletion
and amortization $ 26,518 $ 25,419 $ 26,168 $ 26,678 $ 30,211
Weighted average
number of shares 9,525 9,485 9,197 9,204 9,214
Number of employees
at end of year 2,218 2,203 2,142 2,221 2,385
Stockholders of record 1,228 1,279 1,335 1,302 1,503
(a) Effective October 1, 1992, the Company changed its method of
accounting for employee postretirement benefits in accordance with SFAS
106. The effect on fiscal 1993 was to reduce net income by $1,252,000
($.14 per share).
(b) In 1995, 1994, 1993 and 1991 the Company reported a gain (loss) on
the sale and/or write down of assets of ($2,018,000), ($313,000),
$2,766,000 and $1,035,000, respectively. See Note 10 to the Consolidated
Financial Statements.
(c) In 1993 the Company charged its provision for income taxes $748,000
to reflect the impact on the deferred income tax liability of the increase in
the top Federal corporate income tax rate.
Quarterly Results (Unaudited)
Florida Rock Industries, Inc.
(Dollars in thousands except per share amounts)
First Second Third Fourth
__________ _________ __________ __________
1995 1994 1995 1994 1995 1994 1995 1994
Net sales $89,614 $75,906 $84,684 $66,995 $98,256 $95,598 $96,405 $98,027
Gross profit $17,769 $12,002 $14,003 $ 8,671 $19,906 $20,106 $22,074 $18,652
Operating
profit $9,586 $4,822 $ 5,152 $ 787 $11,155 $11,264 $13,338 $10,588
Income before
income taxes $9,370 $4,405 $ 4,966 $ 352 $10,829 $10,864 $11,207 $ 9,912
Net income $6,137 $2,942 $ 3,253 $ 234 $ 7,093 $ 7,058 $ 7,429 $ 6,982
Per common share:
Net income $ .65 $ .31 $ .34 $ .02 $ .74 $ .74 $ .78 $ .74
Cash dividend $ .25 $ .25 $ .25 $ .25
Market price:
High $27-3/8 $30-5/8 $30 $34-1/2 $29-3/4 $27-1/4 $29-1/4 $27-5/8
Low $25-1/4 $26-7/8 $26-5/8 $25-3/4 $27-5/8 $24 $26-3/8 $23-3/4
a) See Note 14 to the Consolidated Financial Statements.
Management Analysis
Florida Rock Industries, Inc.
Operating Results. The Company's operations are influenced by a number of
external and internal factors. External factors include weather, competition,
levels of construction activity in the Company's markets, the cost and
availability of money, appropriations and construction contract lettings by
federal and state governments, fuel costs, transportation costs and inflation.
Internal factors include sales mix, plant location, quality and quantities of
aggregates reserves, capacity utilization and other operating factors.
Fiscal 1995 and 1994 sales increased 9.6% and 14.3%, respectively, due
to both volume and price increases.
The contribution made to net sales from the sale of construction
materials by the principal classes of products and services for the five years
ended September 30 is as follows:
1995 1994 1993 1992 1991
____ ____ ____ ____ ____
Ready mixed
concrete 58% 56% 56% 58% 59%
Construction
aggregates 40% 41% 42% 41% 40%
Other concrete
products and
building materials 10% 11% 10% 11% 10%
Less intercompany (8%) (8%) (8%) (10%) (9%)
____ ____ ____ ____ ____
100% 100% 100% 100% 100%
The estimated contribution to revenues from the sale of construction materials
by major markets follows:
1995 1994 1993 1992 1991
____ ____ ____ ____ ____
Commercial and
industrial 37% 36% 45% 48% 47%
Residential 40% 42% 29% 26% 24%
Highway and
governmental 23% 22% 26% 26% 29%
In fiscal 1995 and 1994 gross profit increased 24.1% and 42.5%,
respectively. Gross profit margin increased to 20.0% in 1995 and 17.7% in 1994
from 14.2% in 1993. These improvements resulted from the increase in sales,
cost containment, continuing efficiency improvements and the fixed cost
component of the business.
The 8.0% increase in selling, general and administrative expense in
1995 as compared to 1994 was attributable to an increase in profit sharing
contribution which is linked to profitability and an increase in basic expense
levels due to increased sales. Selling, general and administrative expense was
9.4% of sales in 1995 as compared to 9.5% of sales in 1994. The 5.5% increase
in selling, general and administrative expense in 1994, as compared to 1993 was
attributable to increases in profit sharing and management incentive
compensation which are linked to profitability. Selling, general and
administrative expense was 9.5% of sales in 1994 as compared to 10.3% in 1993.
The decrease in interest expense in 1995 was attributable to a
decrease in the average debt outstanding which was substantially offset by
rising interest rates. The decrease in interest expense in 1994 was due to a
decrease in the average debt outstanding.
The increase in interest income in 1995 was due principally to the
higher average interest rates. The decrease in interest income in 1994 was due
principally to the collection of notes during the year, and was offset by
higher average interest rates.
See Note 10 to the Consolidated Financial Statements for information
concerning the gain (loss) on the sale and/or write down of assets. The
effective tax rate for fiscal 1995 increased to 34.3% from 32.6% due to the
increase in earnings and the increase in earnings from non-mining activities.
The effective tax rate for fiscal 1994 decreased to 32.6% from 36.2% in 1993
due to the $748,000 adjustment in 1993 to the deferred tax liability that was
required as a result of the increase in the top Federal tax rate from 34% to
35%.
Liquidity and Capital Resources. The following key financial
measurements reflect the Company's sound financial position and substantial
capital resources at September 30 (dollars in thousands):
1995 1994 1993
____ ____ ____
Cash and cash equivalents $ 925 $ 804 $ 4,069
Total debt $23,224 $32,477 $60,823
Current ratio 1.4 to 1 1.5 to 1 1.4 to 1
Debt as a percent
of capital employed 8.2% 12.0% 21.9%
Unused revolving credit $75,000 $64,000 $49,000
Unused short-term lines $20,600 $23,300 $59,800
In fiscal 1995 cash flows from operations of $54,698,000 covered the
cash required for capital expenditures and other investing activities, the
reduction of debt of $9,360,000 and the paying of the regular dividend. In
fiscal 1994 cash flow from operations of $42,512,000 plus cash on hand at the
beginning of the year covered the cash required for capital expenditures and
other investing activities, the reduction of debt by $20,348,000 and the paying
of the regular dividend.
The Company expects its 1996 expenditures for property, plant and
equipment to be approximately $95,000,000, versus depreciation and depletion
of $29,000,000. Approximately $33,000,000 of the budget is for the first phase
of the proposed cement plant. Management believes that the necessary funds will
be obtained through internal generation and borrowing under the revolving
credit agreement. The Company has available a $75,000,000 revolving credit
agreement which was unused and available at September 30, 1995. The Company
plans to enter into a new revolving credit agreement for $175,000,000 with a
final maturity in 2002. The Company's capital expenditures are by and large
discretionary and not contractual commitments until the actual orders are
placed. However, over time it is desirable and necessary to both replace
equipment due to wear and tear and to make capital expenditures to improve
efficiencies and expand capacity where warranted.
The Company expects that the Purchase and Put Agreements covering
$7,550,000 of the Industrial Revenue Bonds (See Note 5 to the Consolidated
Financial Statements) will continue to be amended until the earlier of the
final maturity date of the respective bonds or until the project financed by
the bonds is terminated. To the extent that the bonds mature or the Purchase
and Put Agreements are not extended, the Company will repurchase and/or repay
the bonds with borrowings under its revolving credit agreement. The Company
believes it will be able to renegotiate its present credit facilities or
obtain similar replacement credit facilities when necessary in the future.
Inflation. In the past two years price increases have generally offset
inflation. In prior years price increases failed to equal inflation and in
certain markets prices declined due to competition.
Consolidated Statement of Income
Florida Rock Industries, Inc.
YEARS ENDED SEPTEMBER 30
(Dollars in thousands except per share amounts)
1995 1994 1993
____ ____ ____
Net sales $368,959 $336,526 $294,431
Cost of sales 295,207 277,095 252,727
_______ _______ _______
Gross profit 73,752 59,431 41,704
Selling, general and
administrative expense 34,521 31,970 30,301
_______ _______ _______
Operating profit 39,231 27,461 11,403
Interest expense (2,060) (2,223) (2,850)
Interest income 616 462 493
Gain (loss) on sale and/or
write down of assets
($1,248 related party loss
in 1995) (2,018) (313) 2,766
Other income, net 603 146 373
_______ _______ _______
Income before income taxes 36,372 25,533 12,185
Provision for income taxes 12,460 8,317 4,408
_______ _______ _______
Net income $ 23,912 $ 17,216 $ 7,777
Earnings per common share $2.51 $1.82 $.85
See accompanying notes.
Consolidated Balance Sheet
Florida Rock Industries, Inc.
SEPTEMBER 30
(Dollars in thousands)
1995 1994
____ ____
Assets
Current assets:
Cash and cash
equivalents. $ 925 $ 804
Accounts receivable,
less allowance for
doubtful accounts
of $1,726 ($1,627 in 1994) 47,923 49,109
Inventories 24,324 20,615
Prepaid expenses and other 5,616 5,192
_______ _______
Total current assets 78,788 75,720
Other assets 26,916 26,794
Property, plant and
equipment, at cost:
Land 105,801 105,345
Plant and equipment 386,271 358,250
_______ _______
492,072 463,595
Less accumulated
depreciation and depletion 271,747 255,519
_______ _______
Net property, plant
and equipment 220,325 208,076
_______ _______
$326,029 $310,590
Liabilities and Stockholders' Equity
Current liabilities:
Short-term notes payable
to banks $ 9,400 $ 6,700
Accounts payable 27,499 25,176
Federal and state income taxes 3,052 2,218
Accrued payroll and benefits 6,582 6,337
Accrued insurance reserve 2,108 1,983
Accrued liabilities, other 4,802 4,223
Long-term debt due
within one year 4,171 2,661
_______ _______
Total current liabilities 57,614 49,298
Long-term debt 9,653 23,116
Deferred income taxes 31,005 30,441
Accrued employee benefits 9,565 9,248
Other accrued liabilities 6,937 6,397
Commitments and contingent
liabilities (Notes 9, 12 and 13)
Stockholders' equity:
Preferred stock, no par value;
10,000,000 shares authorized,
none issued
Common stock, $.10 par value;
50,000,000 shares authorized,
9,487,309 shares issued 949 949
Capital in excess of par value 17,400 17,400
Retained earnings 192,911 173,743
Less cost of treasury stock;
181 shares (87 in 1994) (5) (2)
_______ _______
Total stockholders' equity 211,255 192,090
_______ _______
$326,029 $310,590
See accompanying notes.
Consolidated Statement of Cash Flows
Florida Rock Industries, Inc.
YEARS ENDED SEPTEMBER 30
(Dollars in thousands)
1995 1994 1993
____ ____ ____
Cash flows from
operating activities:
Net income. $23,912 $17,216 $ 7,777
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation, depletion
and amortization 26,518 25,419 26,168
Net changes in operating
assets and liabilities:
(Increase) decrease in
accounts receivable 820 (7,305) (6,092)
(Increase) decrease
in inventories. (3,709) 2,490 (1,242)
(Increase) decrease in
prepaid expenses and other (100) (259) 744
Increase in accounts payable
and accrued liabilities 6,339 4,555 9,600
Increase (decrease) in
deferred income taxes (150) 482 (645)
Gain on disposition of
property, plant and equipment (1,006) (382) (2,837)
Other, net 2,074 296 507
______ ______ ______
Net cash provided by
operating activities 54,698 42,512 33,980
Cash flows from
investing activities:
Purchase of property,
plant and equipment (40,218) (23,063) (32,811)
Proceeds from the sale of
property, plant and equipment 1,393 661 4,986
Additions to other assets (2,232) (1,839) (2,615)
Proceeds from the disposition
of other assets 80 693 523
Additions to notes receivable (335)
Collection of notes receivable 507 3,174 410
______ ______ ______
Net cash used in
investing activities (40,470) (20,709) (29,507)
Cash flows from financing activities:
Proceeds from long-term debt 13,000
Net increase (decrease) in
short-term debt 2,700 (3,500) (3,800)
Repayment of long-term debt (12,060) (16,848) (6,142)
Exercise of employee stock options 23 -
Repurchase of Company stock (3) (2) (65)
Payment of dividends (4,744) (4,741) (4,598)
______ ______ ______
Net cash used in
financing activities (14,107) (25,068) (1,605)
______ ______ ______
Net increase (decrease) in
cash and cash equivalents 121 (3,265) 2,868
Cash and cash equivalents
at beginning of year 804 4,069 1,201
______ ______ ______
Cash and cash equivalents
at end of year $ 925 $ 804 $ 4,069
Supplemental disclosures of
cash flow information:
Cash paid during the year for:
Interest expense,
net of amount capitalized $ 2,144 $ 2,769 $ 2,764
Income taxes $11,425 $ 9,814 $ 5,206
Noncash investing and
financing activities:
Additions to property,
plant and equipment from:
Exchanges $ 49 $ 58 $ 61
Issuing debt $ 107 $ 686
Issuing common stock
in payment of note payable $ 8,000
Addition to notes receivable
from the sale of property,
plant and equipment $ 431
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments with maturities of three months or less at the time of
purchase to be cash equivalents.
See accompanying notes.
Consolidated Statement of Stockholders' Equity
Florida Rock Industries, Inc.
YEARS ENDED SEPTEMBER 30
(Dollars in thousands except per share amounts)
Capital in
Common Stock Retained Treasury Stock
_______________ Excess of ________________
Shares Amount Par Value Earnings Shares Amount
________ _______ ________ ________ _______ _______
Balance at
October 1, 1992 9,288,708 $929 $11,430 $158,089 (90,175)($1,968)
Shares purchased
for treasury (3,033) (65)
Net income 7,777
Cash dividends
($.50 per share) (4,598)
________ ___ ______ _______ ______ _____
Balance at
September 30,1993 9,288,708 929 11,430 161,268 (93,208)(2,033)
Shares issued in
payment of note 197,701 20 5,947 93,208 2,033
Exercise of stock
options 900 23
Shares purchased
for treasury (87) (2)
Net income 17,216
Cash dividends
($.50 per share) (4,741)
________ ___ ______ _______ ______ _____
Balance at
September 30,1994 9,487,309 949 17,400 173,743 (87) (2)
Shares purchased
for treasury (94) (3)
Net income 23,912
Cash dividends
($.50 per share) (4,744)
________ ___ _____ _______ ______ _____
Balance at
September 30,1995 9,487,309 $949 $17,400 $192,911 (181) ($5)
See accompanying notes.
Notes to Consolidated Financial Statements
Florida Rock Industries, Inc.
1. Accounting policies. CONSOLIDATION - The consolidated financial
statements include the accounts of the Company and its subsidiaries, all of
which are wholly owned. All significant intercompany transactions have been
eliminated in consolidation.
INVENTORIES - Inventories are valued at the lower of cost or market.
Cost for parts and supplies inventory is determined under the first-in,
first-out (FIFO) method. Cost for other inventories is determined under the
last-in, first-out (LIFO) and average cost methods.
DEPRECIATION, DEPLETION AND AMORTIZATION - Provision for depreciation
of plant and equipment is computed using the straight-line method based on the
following estimated useful lives:
Years
____
Buildings and improvements 8-30
Machinery and equipment 3-15
Automobiles, trucks and mobile equipment 3- 8
Furniture and fixtures 3-10
Depletion of sand and stone deposits is computed on the basis of units
of production in relation to estimated reserves. Substantially all goodwill is
being amortized over forty years using the straight-line method.
INCOME TAXES - The Company uses an asset and liability approach to
financial reporting for income taxes. Under this method, deferred tax assets
and liabilities are recognized based on differences between financial statement
and tax bases of assets and liabilities using presently enacted tax rates.
Deferred income taxes result from temporary differences between pre-tax income
reported in the financial statements and taxable income.
EARNINGS PER COMMON SHARE - Earnings per common share are based on the
weighted average number of common shares outstanding and common stock
equivalents, where applicable.
CONCENTRATIONS OF CREDIT RISK - The Company's operations are located
within the Southeastern United States. It sells construction materials and
grants credit to customers, substantially all of whom are related to the
construction industry.
RECLAMATION - The Company accrues the estimated cost of reclamation
over the life of the deposit based on tons sold in relation to total estimated
tons of reserves. Expenses paid by the Company are charged to the reserve.
RISK INSURANCE - The Company has a $500,000 self-insured retention per
occurrence in connection with its workers' compensation, automobile liability,
and general liability insurance programs ("Risk Insurance"). The Company
accrues monthly its estimated cost in connection with its portion of its Risk
Insurance losses. Claims paid by the Company are charged against the reserve.
Additionally, the Company maintains a reserve for incurred but not reported
claims based on historical analysis of such claims.
ENVIRONMENTAL - Environmental expenditures that benefit future periods
are capitalized. Expenditures that relate to an existing condition caused by
past operations, and which do not contribute to current or future revenue
generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the costs can be
reasonably estimated. Estimation of such liabilities is extremely complex.
Some factors that must be assessed are engineering estimates, continually
evolving governmental laws and standards, and potential involvement of other
potentially responsible parties.
FUTURE ACCOUNTING REQUIREMENTS - In October 1995, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" (SFAS 123). SFAS 123
establishes a fair value based method of accounting for stock-based employee
compensation plans, however, it also allows companies to continue to measure
cost for such plans using the method of accounting prescribed by Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25). Companies that elect to continue with the accounting under APB 25
must provide pro forma disclosures of net income and earnings per share, as if
SFAS123 had been applied. The accounting and disclosure requirements of SFAS
123 are effective for the Company for transactions entered into in fiscal
1997. Pro forma disclosures required if the Company elects to continue using
APB 25 must include the effects of all awards granted in fiscal 1996, but
should be presented for fiscal years subsequent thereto for fiscal 1996
financial statements presented for comparative purposes. The Company is
currently evaluating its alternatives under SFAS 123 and its impact on
operating results when initially adopted is not presently known.
2. Transactions with related parties. As of September 30, 1995 eight
of the Company's directors were also directors of FRP Properties, Inc.
("FRPP"). Such directors own approximately 38% of the stock of FRPP and 30%
of the stock of the Company. Accordingly, FRPP and the Company are considered
related parties.
FRPP, through its transportation subsidiaries, hauls construction
aggregates for the Company and customers of the Company. It also hauls diesel
fuel and other supplies for the Company. Charges for these services are based
on prevailing market prices.
Other wholly owned subsidiaries of FRPP lease certain construction
aggregates mining and other properties and provide construction management
services to the Company.
The Company paid rents, royalties and transportation charges to
subsidiaries of FRPP totaling $5,869,000 in 1995, $6,029,000 in 1994, and
$6,259,000 in 1993.
At September 30, 1995 and 1994 the Company had a net account payable
due to subsidiaries of FRPP of $163,000 and $144,000, respectively.
Under an agreement extending until September 30, 1997, the Company
furnishes certain management and related services, including financial, tax,
legal, administrative, accounting and computer, to FRPP and its subsidiaries.
Charges for such services were $1,312,000 in 1995, $1,208,000 in 1994, and
$1,101,000 in 1993.
On September 30, 1995 a wholly owned subsidiary of the Company entered
into a contract to sell 134 acres of land to a subsidiary of FRP Properties,
Inc. for $500,000 and the assumption of certain reclamation costs and benefits
relating to the site. An appraisal of the property was obtained. The
transaction was approved by the Company's Board of Directors with the directors
who are also directors of FRP Properties, Inc. abstaining. The Company recorded
a write down of $1,248,000 in the carrying value of this land on September 30,
1995.
A member of the Company's Board of Directors is also a director and
has a beneficial interest in a company that provides insurance services to the
Company, including life insurance on certain employees and officers and claims
paying functions for the Company's employee health benefits program. Premiums
paid on such life insurance during fiscal 1995 totaled approximately
$1,145,000. Administrative fees paid in connection with processing employee
health benefit claims totaled approximately $23,000 for fiscal 1995.
3. Inventories. Inventories at September 30 consisted of the following
(in thousands):
1995 1994
____ ____
Finished products $19,658 $16,329
Raw materials 3,580 3,249
Parts and supplies 1,086 1,037
______ ______
$24,324 $20,615
The excess of current cost over the LIFO stated values of inventories was
$3,800,000 at September 30, 1995 and $3,282,000 at September 30, 1994.
4. Other assets. Other assets at September 30 consisted of the
following (in thousands):
1995 1994
____ ____
Real estate $ 2,966 $ 3,349
Notes receivable 5,382 5,523
Goodwill at cost less accumulated
amortization of $3,116 ($2,786 in 1994) 10,129 10,458
Other 8,439 7,464
______ _______
$26,916 $26,794
5. Lines of credit and debt. Long-term debt at September 30 is
summarized as follows (in thousands):
1995 1994
____ ____
Unsecured notes:
8%-10% notes $ 1,154 $ 1,060
Revolving credit - 11,000
Industrial development
revenue bonds 11,071 11,963
7% - 12% secured notes and contracts 1,599 1,754
______ ______
13,824 25,777
Less portion due within one year 4,171 2,661
______ ______
$ 9,653 $23,116
Of the industrial development revenue bonds at September 30, 1995, $7,550,000
is due between 2004 and 2021. The bonds provide for quarterly interest payments
between 68.0% and 71.5% of prime rate. The bonds are subject to Purchase and
Put Agreements with several banks whereby the bondholders may, at their option,
sell the bonds to the Company during the following fiscal years: $1,775,000 in
1996; $2,275,000 in 1997; $900,000 in 1998; $1,400,000 in 1999; $600,000 in
2000; and $600,000 in 2001 and subsequent years. The balance of the industrial
development revenue bonds totaling $3,521,000 at September 30, 1995 is at
floating rates of interest and matures through 1999. The bonds are
collateralized by certain property, plant and equipment having a carrying value
of $5,854,000 at September 30, 1995.
The secured notes and contracts are collateralized by certain real
estate having a carrying value of approximately $2,747,000 at September 30,
1995 and are payable in installments through 2004.
The aggregate amount of principal payments, excluding the revolving
credit, due subsequent to September 30, 1995, assuming that all of the
industrial development revenue bondholders exercise their options to sell the
bonds to the Company, is: 1996 - $4,171,000; 1997 - $3,140,000; 1998 -
$1,709,000; 1999 - $2,203,000; 2000 - $1,394,000; 2001 and subsequent years -
$1,207,000.
The Company has a revolving credit agreement under which it may borrow
up to $75,000,000 on term loans payable in consecutive quarterly installments
of 5% of the original amount commencing September 30, 1997 and a final payment
of the unpaid balance on June 30, 2000. Interest is payable at prime rate until
June 30, 1997 and at 3/8 of 1% above such prime rate thereafter. Alternative
interest rates based on the London interbank rate and/or the reserve-adjusted
certificate of deposit rate are available at the Company's option. A commitment
fee of 3/16 to 3/8 of 1% is payable on the unused amount of the commitment.
The Company also has available short-term lines of credit from three
banks aggregating $30,000,000. Under these lines the Company may borrow funds
for a period of one to ninety days. There is no commitment fee and the banks
can terminate the lines at any time. The interest rate is determined at the
time of each borrowing. The weighted average interest rates on such borrowings
at September 30, 1995 and 1994 were 6.2% and 5.4%, respectively.
The various loan agreements contain restrictive covenants, including a
requirement to maintain a consolidated current ratio and consolidated tangible
net worth (as defined) at certain levels, limitations on paying cash dividends,
and other restrictions. As of September 30, 1995, under the most restrictive of
the agreements, $50,949,000 of consolidated retained earnings was not
restricted as to payment of cash dividends.
The Company capitalized interest cost of $35,000 in 1994 and $162,000
in 1993.
6. Stock option plan. The Company has a stock option plan under which
options for shares of common stock may be granted to directors, officers and
key employees.
Option transactions for the fiscal years ended September 30 are summarized as
follows:
1995 1994 1993
____ ____ ____
Shares under option:
Outstanding at beginning of year 534,600 529,050 551,150
Granted 17,500 13,500 -
Exercised ($25.12 per share) - (900) -
Cancelled (5,750) (7,050) (22,100)
_______ _______ _______
Outstanding at end of year
(1995-$24.75 to $30.37 per share) 546,350 534,600 529,050
Aggregate option pr $14,553,000 $14,209,000 $14,075,000
Shares available for
future grant 101,750 113,500 119,950
Shares exercisable
at end of year 371,510 297,440 195,210
Options granted have been at a price equal to the fair market value of the
Company's common stock on the dates of grant. The options expire from seven
to ten years from the date of grant and become exercisable in cumulative
installments of 20% each year after a one year waiting period from the date
of grant.
7. Income taxes. The provision (benefit) for income taxes for the
fiscal years ended September 30 consisted of the following (in thousands):
1995 1994 1993
____ ____ ____
Current:
Federal $10,507 $6,439 $4,069
State 2,103 1,396 984
______ ______ ______
12,610 7,835 5,053
Deferred (150) 482 (1,393)
Federal tax rate change. - - 748
______ ______ ______
Total $12,460 $8,317 $4,408
In the fourth quarter of fiscal 1993, the Company revised its estimated
annual effective tax rate to reflect the change in the Federal statutory rate
from 34% to 35%. The effect of this change was to increase income tax expense
for 1993 by $880,000. Of this amount, $748,000 related to applying the newly
enacted statutory income tax rate to the deferred income tax liability.
A reconciliation between the amount of reported income tax provision
and the amount computed at the statutory Federal income tax rate follows (in
thousands):
1995 1994 1993
____ ____ ____
Amount computed at statutory
Federal rate $12,731 $8,936 4,234
Effect of percentage depletion (1,599) (1,578 (1,151)
State income taxes (net of
Federal income tax benefit) 1,219 811 384
Federal tax rate change - - 748
Other, net 109 148 193
______ _____ _____
Provision for income taxes $12,460 $8,317 $4,408
The types of temporary differences and their related tax effects that give
rise to deferred tax assets and deferred tax liabilities at September 30
are presented below:
1995 1994
____ ____
Deferred tax liabilities:
Basis difference in property,
plant and equipment $36,393 $36,486
Other 674 508
______ ______
Gross deferred tax liabilities 37,067 36,994
Deferred tax assets:
Insurance reserves 2,212 2,258
Other accrued liabilities 6,652 5,821
Credit carryover - 902
Other 906 953
______ ______
Gross deferred tax assets 9,770 9,934
Valuation allowance for
deferred tax assets - -
_______ _____
Net deferred tax assets 9,770 9,934
_______ _____
Net deferred tax liability $27,297 $27,060
The Company's valuation allowance for deferred tax assets as of October
1, 1993 was $380,000.
8. Employee benefits. The Company and its subsidiaries have a number of
retirement plans which cover substantially all employees.
Certain of the Company's subsidiaries have noncontributory defined
benefit retirement plans covering certain employees. The benefits are based on
years of service and the employee's highest average compensation for any five
(or in the case of one plan three) consecutive years of service. Plan assets
are invested in mutual funds, listed stocks and bonds and cash equivalents. The
Company's funding policy is to fund annually within the limits imposed by the
Employee Retirement Income Security Act.
Net periodic pension cost (income) for fiscal years ended September
30 included the following components (in thousands):
1995 1994 1993
____ ____ ____
Service cost-benefits earned
during the period $ 377 $ 611 $ 635
Interest cost on projected
benefit obligation 1,132 1,046 1,081
Actual return on assets (2,501) 900 (2,115)
Net amortization and deferral 1,094 (2,447) 802
Curtailment gain - (174) -
_____ _____ _____
Net periodic pension cost (income) $ 102 ($ 64) $ 403
Assumptions used in determining the net periodic pension cost may vary by plan
and are summarized as follows:
1995 1994 1993
____ ____ ____
Discount rate 7.25% 8% 7%
Rate of increase in compensation levels 5% 5.25% 5%
Expected long-term rate of return on assets 9% 9% 9%
The following table sets forth the plans' funded status and amounts
recognized in the Company's consolidated balance sheet at September 30 (in
thousands):
1995 1994
________ _____________
Assets Assets Accumulated
Exceed Exceed Benefits
Accumulated Accumulated Exceed
Benefits Benefits Assets
_________ ________ ________
Actuarial present value of
vested benefit obligations ($14,891) ($2,528) ($ 9,913)
Accumulated benefit
obligation (15,002) ($2,535) ($10,012)
Projected benefit
obligation (16,364) ($3,216) ($11,064)
Plan assets at fair value 16,695 4,914 10,170
Projected benefit obligation
(in excess of) or less
than plan assets 331 1,698 (894)
Unrecognized net
(gain) or loss (259) (31) (873)
Unrecognized transition
obligation (asset) (777) (863) -
Unrecognized prior
service cost (16) 182 162
_______ _______ ______
Prepaid pension cost
(pension liability) ($ 721) $ 986 ($ 1,605)
Union employees are covered by multi-employer plans not administered
by the Company. Payments of $219,000, $275,000 and $279,000 were made to these
plans during fiscal 1995, 1994 and 1993, respectively.
Additionally, the Company and certain subsidiaries have savings/profit
sharing plans for the benefit of qualified employees. The savings feature of
the plans incorporates the provisions of Section 401(k) of the Internal Revenue
Code. Under the savings feature of the plans, eligible employees may elect to
save a portion (within limits) of their compensation on a tax deferred basis.
The Company contributes to a participant's account an amount equal to 50% (with
certain limits) of the participant's contribution . Additionally, the Company
and certain subsidiaries may make annual contributions to the plans as
determined by the Board of Directors, with certain limitations. The plans
provide for deferred vesting with benefits payable upon retirement or earlier
termination of employment. The total cost of the plans was $3,510,000 in 1995;
$2,648,000 in 1994 and $1,445,000 in 1993.
The Company has a management security plan for certain officers and
key employees. The accruals for future benefits are based upon the remaining
years to retirement of the participating employees. The Company has purchased
life insurance on the lives of the participants and it is the owner and
beneficiary of such policies. The expense for fiscal 1995, 1994 and 1993 was
$1,296,000, $1,160,000 and $1,038,000, respectively.
The Company and one of its subsidiaries provide certain health care
benefits for retired employees. Employees may become eligible for those
benefits if they were employed by the Company prior to December 10, 1992, meet
service requirements and reach retirement age while working for the Company.
The plans are contributory and unfunded. The Company accrues the estimated cost
of retiree health benefits over the years that the employees render service.
The following table sets forth the plans' combined status reconciled
with the accrued postretirement benefit cost included in the Company's
consolidated balance sheet at September 30 (in thousands):
1995 1994 1993
____ ____ ____
Accumulated postretirement
benefit obligations:
Retirees $1,424 $1,680 $3,705
Fully eligible active participants 616 597 1,606
Other active participants 874 677 7,376
______ ______ ______
Total APBO 2,914 2,954 12,687
Unrecognized net loss
from past experience
different from that
assumed and from
changes in assumptions (1,221) (1,377) (1,560)
Unrecognized prior service costs 684 894 -
Unrecognized transition obligation - - (9,088)
______ ______ ______
Accrued postretirement benefit cost $2,377 $2,471 $2,039
Net periodic postretirement benefit cost for fiscal years ended
September 30 includes the following components (in thousands):
1995 1994 1993
____ ____ ____
Service cost of benefits
earned during the period $ 133 $ 260 $ 678
Interest cost on APBO 206 380 1,008
Net amortization and deferral (101) (127) -
Amortization of transition
obligation over 20 years - 120 628
_____ _____ _____
Net periodic postretirement
benefit cost $ 238 $ 633 $2,314
The discount rate used in determining the Net Periodic Postretirement
Benefit Cost and the APBO was 7.25% at September 30, 1995, 8% at September 30,
1994 and 7% at September 30, 1993.
Effective January 1, 1994, the Company's share of retiree health care
was capped at the Company's 1993 cost level.
9. Leases. Certain plant sites, office space and equipment are rented
under operating leases. Total rental expense, excluding mineral leases, for
fiscal 1995, 1994 and 1993 was $4,231,000, $3,465,000 and $3,965,000,
respectively. Future minimum lease payments under operating leases with an
initial or remaining noncancelable term in excess of one year, exclusive of
mineral leases, at September 30, 1995 are as follows: 1996 -$1,447,000; 1997-
$1,243,000; 1998 - $1,213,000; 1999 - $1,183,000; 2000 - $1,181,000; after
2000 - $8,921,000. Certain leases include options for renewal. Most leases
require the Company to pay for utilities, insurance and maintenance.
The Company has a long-term lease, which may not be cancelled prior to
September 1, 1998, with FRPP for sand reserves near Grandin, Florida. Under
the lease the Company will pay minimum royalties of $1,000,000 per year.
10. Gain (loss) on sale and/or write down of assets. In fiscal 1995
the Company recorded a loss on the write down of the carrying value of certain
real estate totaling $2,018,000. In fiscal 1994 the Company sold certain real
estate which resulted in a loss of $313,000. In August 1993 the Company sold
its S&G Concrete Co.'s North Carolina ready mixed concrete assets for cash and
reported a gain of $2,715,000. Also, in fiscal 1993 the Company sold other
land which resulted in a gain of $51,000.
11. Fair values of financial instruments. At September 30, 1995 and
1994 the carrying amount reported in the balance sheet for cash and cash
equivalents, notes receivable, short-term notes payable to banks, revolving
credit and industrial development revenue bonds approximate their fair value.
The fair values of the Company's other long-term debt are estimated using
discounted cash flow analysis, based on the Company's current incremental
borrowing rates for similar types of borrowing arrangements. At September 30,
1995 the carrying amount and fair value of such other long-term debt was
$2,753,000 and $2,941,000, respectively. At September 30, 1994 the carrying
amount and fair value of such other long-term debt was $2,814,000 and
$3,040,000, respectively.
12. Contingent liabilities. The Company and its subsidiaries are
involved in litigation on a number of matters and are subject to certain
claims which arise in the normal course of business, none of which, in the
opinion of management, are expected to have a materially adverse effect on the
Company's consolidated financial statements.
The Company has retained certain self-insurance risks with respect to losses
for third party liability and property damage.
The Company has been advised of soil and groundwater contamination by
petroleum products in the vicinity of an underground storage tank on a site
owned by the Company. The contaminated soil and groundwater will have to be
remediated in accordance with state and federal laws. An environmental
consulting firm is investigating the site and has submitted a Contamination
Assessment Report ("CAR") to the Florida Department of Environmental
Protection ("DEP") for its review and approval. Following DEP approval of the
CAR, a Remedial Action Plan will be developed and submitted to the DEP for
approval. The consultants' estimate of the cost of remediation on similar
non-Company sites ranges from $200,000 to $1,000,000. At September 30, 1995,
the Company had recorded a liability for $400,000; it has not recorded any
potential claims that it may have against the former owner of the site or
through the Florida Petroleum Liability Insurance and Restoration Program
and/or the Florida Abandoned Tank Restoration Program. Because of the
uncertainties associated with environmental assessment and remediation
activities, future expenses to remediate the currently identified site could
be considerably higher than the accrued liability. However, the Company
believes that the cost of remediation will not have a materially adverse
effect upon its financial condition or earnings.
In May of 1993 the National Labor Relations Board ("NLRB") issued a Complaint
against a subsidiary of the Company (herein the "Subsidiary") based on unfair
labor practice charges previously filed by Teamsters Local 639. The Complaint
seeks an order from the NLRB requiring the Subsidiary to recognize the
Teamsters as its employees' exclusive collective bargaining representative, to
restore certain previous terms and conditions of employment and to make whole
the affected employees and certain employee benefit plans for losses as a
result of changes in terms and conditions of employment made by the Subsidiary.
The Subsidiary has denied such charges and is vigorously defending its
position. In April of 1994, an Administrative Law Judge ("ALJ") of the NLRB
issued a Recommended Decision and Order recommending a ruling against the
Subsidiary's position and recommending the relief sought in the Complaint. The
Subsidiary filed an appeal with the NLRB. In February 1995, the NLRB affirmed
the ALJ's decision in substantial part. The Company has appealed the NLRB's
decision to the Fourth Circuit Court of Appeals where the matter is now
pending. The ultimate liability, if any, with respect to this matter cannot
reasonably be estimated. However, it is the opinion of the Company's management
that the ultimate disposition of this matter will not have a material adverse
effect on the Company's consolidated financial statements.
13. Commitments. At September 30, 1995, the Company had placed orders
and was committed to purchase equipment costing approximately $6,361,000.
14. Fourth quarter financial information (unaudited). Significant items
affecting income in the fourth quarter of fiscal 1995 include a $2,046,000
increase in construction aggregates stockpile inventories due to the physical
measurement of the stockpiles and the write down of the carrying value of
certain real estate of $2,018,000.
Independent Auditors' Report
Florida Rock Industries, Inc.
The Board of Directors and Stockholders
Florida Rock Industries, Inc.
We have audited the accompanying consolidated balance sheets of Florida Rock
Industries, Inc. and its subsidiary companies as of September 30, 1995 and
1994, and the related consolidated statements of income, stockholders' equity,
and cash flows for each of the two years in the period ended September 30,
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The consolidated financial statements for the
year ended September 30, 1993 were audited by other auditors whose report,
dated November 30, 1993, expressed an unqualified opinion on those statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such 1995 and 1994 consolidated financial statements present
fairly, in all material respects, the financial position of Florida Rock
Industries, Inc. and its subsidiary companies at September 30, 1995 and 1994,
and the results of their operations and their cash flows for each of the two
years in the period ended September 30, 1995 in conformity with generally
accepted accounting principles.
Deloitte & Touche LLP
Jacksonville, Florida
December 1, 1995
Directors and Officers
Florida Rock Industries, Inc.
Directors
Thompson S. Baker (1)
Chairman Emeritus of the Company
Edward L. Baker (1)
Chairman of the Board and
Chief Executive Officer of the Company
John D. Baker II (1)
President of the Company
Thompson S. Baker II
Vice President of the Company
Alvin R. (Pete) Carpenter
President and Chief Executive Officer
of CSX Transportation, Inc.
Robert D. Davis (3)
Chairman of the Board of DDI, Inc.
Charles H. Denny III
Investments
AIbert D. Ernest, Jr. (2) (3)
President of
Albert Ernest Enterprises
Luke E. Fichthorn III (2)
Private Investment Banker,
Twain Associates and Chairman of
the Board and Chief Executive Officer
of Bairnco Corporation
Frank M. Hubbard (2) (3)
Chairman of the Board of
A. Friends' Foundation Trust
Francis X. Knott
Chief Executive Officer
of Partners Management Company
Radford D. Lovett (2) (3)
Chairman of the Board of
Commodores Point Terminal Corp.
W. Thomas Rice (2) (3)
Chairman Emeritus of Seaboard
Coast Line Industries, Inc.
C. J. Shepherdson
Vice President of the Company
(1) Member of the Executive Committee
(2) Member of the Audit Committee
(3) Member of the Compensation Committee
Officers
Edward L. Baker
Chairman of the Board and
Chief Executive Officer
John D. Baker II
President
H. B. Horner
Executive Vice President
C. J. Shepherdson
Vice President
CHAIRMAN, NORTHERN CONCRETE GROUP
Donald L. Bloebaum
Vice President
PRESIDENT, AGGREGATES GROUP
S. Robert Hays
Vice President
PRESIDENT, FLORIDA CONCRETE GROUP
Fred W. Cohrs
Vice President
PRESIDENT, CEMENT GROUP
Clarron E. Render, Jr.
Vice President
PRESIDENT, NORTHERN CONCRETE GROUP
Thompson S. Baker II
Vice President
EXECUTIVE VICE PRESIDENT,
AGGREGATES GROUP
Robert C. Peace
Vice President
QUALITY
Ruggles B. Carlson
Vice President and Treasurer
FINANCE
Dennis D. Frick
Secretary
CORPORATE COUNSEL
Wallace A. Patzke, Jr.
Controller
John W. Green
Assistant Secretary
DIRECTOR OF CORPORATE CREDIT
Florida Rock Industries, Inc.
General Office: 155 East 21st Street
Jacksonville, Florida 32206
Telephone: (904) 355-1781
Annual Meeting
Shareholders are cordially invited to attend the Annual Stockholders Meeting
which will be held at 9 a.m. local time, on Wednesday, February 7, 1996, at the
general offices of the Company, 155 East 21st Street, Jacksonville, Florida.
Transfer Agent
First Union National Bank
of North Carolina
230 South Tryon Street, 10th Floor
Charlotte, NC 28288-1154
Telephone: 1-800-829-8432
General Counsel
Lewis S. Lee, Esquire
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
Jacksonville, Florida
Independent Auditors
Deloitte & Touche LLP
Jacksonville, Florida
Common Stock Listed
American Stock Exchange
(Symbol: FRK)
Form 10-K
Stockholders may receive without charge a copy of Florida Rock Industries,
Inc.'s annual report to the Securities and Exchange Commission on Form 10-K
by writing to the Treasurer at P.O. Box 4667, Jacksonville, Florida 32201.